Where LinkedIn’s Revenue Comes From?

LinkedIn is “a place where people could build and engage with their professional networks, access shared knowledge and insights, as well as discover new business opportunities”.(6) As Linked in is a professional social networking website, generating revenue is high on it’s list of priorities. However LinkedIn is a free service, which poses the question, how does it make money? LinkedIn, being the intuitive and highly adaptable service that it is has figured a way to combine different revenue gaining ideas.

LinkedIn generates money in three ways:

(Talent Solutions) Selling recruitment services to employers

(Marketing Solutions) Selling premium advertising

(Premium Accounts) Selling premium subscriptions to both employers and users

Ref – (1)

“Talent solutions” is basically the way in which recruiters and businesses have to the ability to search for and contact potential employees that have profiles on the network. This is the way in which the majority of LinkedIn’s revenue is generated. It can be an extremely powerful tool for both the employer and the employee. “Talent Solutions brought in $524 million in 2012, and accounts for 54% of the company’s $972.3 million in revenue for the year.” (3)

LinkedIn’s Marketing Solutions scheme allows them to generate a substantial amount of revenue without forcing the company to rely on advertisements. Marketing solutions comes second to Talent solutions in terms off gross income. “Revenue from Marketing Solutions was $258 million in 2012, and accounted for roughly 26% of LinkedIn’s total revenue.” (3)

Premium subscriptions to LinkedIn is the third way that it can generate an income. This accounts for 20% of the revenue. These Premium subscriptions differ from standard subscriptions giving the user an enhanced use of the product. With this the user can:

The above graph also shows the growth of the breakdown of LinkedIn’s revenue generated. So now we can see the three pronged ploy that LinkedIn use to generate an income to enable growth and sustainability. As LinkedIn won’t be seen as attractive to the average Joe Blogs, it has the opposite effect on the high earning worker. As this is the case, LinkedIn’S marketing schemes and premium memberships tend to work as the user is intrigued with the service.

In terms of growth, LinkedIn’s users and sales may not be a colossal as Facebook or Twitters, however it is proportional to it’s competing social networks.

Figure 2: This is a graph showing the sales and user growth of LinkedIn comparing with Facebook and Twitter. Sourced from – http://money.cnn.com/2014/02/06/technology/social/linkedin-shares/ (2)

It’s true that LinkedIn’s Growth rate and income has slowed considerably, however experts maintain that the company and service it provides is sustainable and will continue to survive in today’s social and professional networking world.